Executive Summary

• Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to reform Medicare physician payment by replacing the unstable Sustainable Growth Rate formula and creating a new framework intended to reward value rather than volume.
• The law succeeded in ending a recurring “doc fix” issue that elicited routine congressional attention, but its Quality Payment Program – which created the Merit-based Incentive Payment System (MIPS) and the Advanced Alternative Payment Models (Advanced APMs) – has not demonstrated that it can meaningfully improve value in fee-for-service Medicare.
• MACRA’s record is mixed: MIPS has produced high clinician scores and small payment adjustments, while Advanced APMs have increased participation in accountable payment arrangements but have not clearly generated net Medicare savings once bonuses, shared-savings payments, and other costs are included.

Introduction

In 2015, Congress enacted the Medicare Access and CHIP Reauthorization Act (MACRA), one of the most significant changes to Medicare physician payment policy at the time. The law had both short- and long-term purposes. In the short term, it repealed Medicare’s Sustainable Growth Rate (SGR) formula, which had repeatedly scheduled large physician payment cuts that Congress then delayed through temporary “doc fix” legislation. MACRA ended that annual cycle of uncertainty and replaced it with a more stable statutory framework.

In the longer term, MACRA intended to move Medicare fee-for-service (FFS) physician payment away from volume and toward value by creating a new Centers for Medicare and Medicaid Services (CMS) reimbursement system called the Quality Payment Program (QPP). Under QPP, clinicians would be assessed through either the Merit-based Incentive Payment System (MIPS) or Advanced Alternative Payment Models (Advanced APMs). The theory was that Medicare could continue to operate largely within an FFS framework while using quality measures, performance adjustments, and alternative payment incentives to reward more efficient care.

Ten years later, the law succeeded in its most immediate objective. It ended the SGR and removed an unrealistic payment formula from Medicare. But the broader value-based payment experiment has been less convincing. MIPS has generally produced high scores and small payment adjustments, raising questions about whether it meaningfully differentiates high-value from low-value care. Advanced APMs offer a stronger conceptual pathway, but their fiscal record is mixed once incentive payments and other costs are included. That does not mean MACRA was a failure. It solved a real problem in Medicare physician payment. But it also did not fully validate the idea that adding quality reporting, modest payment adjustments, and participation bonuses to FFS medicine would meaningfully improve value or reduce Medicare spending.

MACRA’s Intent

The Medicare portions of MACRA were enacted for two key reasons. First, in response to a practical problem that had become impossible to ignore. The SGR was intended to restrain Medicare physician spending by tying annual payment changes to a spending target linked to broader economic growth. In practice, however, it became politically unsustainable. As scheduled reductions grew larger, Congress repeatedly stepped in to stop them from taking effect. MACRA ended that cycle. By repealing the SGR, Congress replaced an unstable formula with a more predictable physician-payment framework. This part of the law was not primarily about quality measurement or delivery system reform. It was about ending the recurring threat of large payment cuts that few policymakers believed would be allowed to occur anyway.

The law’s second ambition was broader. MACRA created the QPP to introduce a new value-based structure into traditional Medicare physician payment. Rather than paying clinicians based solely on the volume of services delivered, the QPP would adjust payments based on performance and encourage participation in more accountable payment arrangements.

The QPP operates through two main tracks. First, the MIPS program, which is a broader track and applies performance-based adjustments to FFS payments. It consolidated prior Medicare quality-reporting programs and scores clinicians on quality, cost, improvement activities, and use of certified health information technology. Clinicians with higher scores can receive positive payment adjustments, while clinicians with lower scores can receive negative adjustments.

The second track, Advanced APMs, was intended to alter the larger payment system toward value. These models encourage clinicians to participate in payment arrangements involving greater accountability for cost and quality. In theory, Advanced APMs move beyond marginal performance adjustments by placing clinicians or organizations in arrangements where they can be rewarded for improving care and reducing spending relative to benchmarks.

This structure reflected the dominant Medicare reform theory of the period: FFS payment rewards volume, so Medicare should use quality measures, cost measures, and alternative payment incentives to counteract that basic incentive. Over time, the expectation was that clinicians would reduce unnecessary utilization, coordinate care more effectively, improve quality, and eventually slow Medicare spending growth.

MACRA Succeeded in Replacing the SGR

On its first objective, MACRA largely did what Congress intended. It ended the recurring “doc fix” cycle and gave Medicare physician payment a more stable statutory foundation. A payment system built around scheduled cuts that Congress routinely blocked was not a credible long-term framework for Medicare.

While the SGR had intended to restrain spending growth, the deferrals largely mooted those impacts. The Congressional Budget Office (CBO) estimated in 2015 that MACRA would increase direct spending by about $145 billion and increase revenues by about $4 billion over 2015–2025, for a net $141 billion increase in federal deficits relative to then-current law. That estimate reflected the official baseline, under which the scheduled SGR cuts were assumed to take effect.

Yet that baseline was more formal than realistic. Congress had repeatedly prevented the SGR cuts from occurring, so measuring MACRA against a world in which the cuts took effect overstated the practical cost of the law. Compared with the more plausible alternative of freezing Medicare physician payment rates, CBO estimated that MACRA would cost $0.9 billion less over 2015–2025.

CMS’ Office of the Actuary projected only a modest long-range trust fund improvement. In its revised analysis, CMS estimated that MACRA would reduce the 75-year Part A actuarial deficit from 0.87 percent of taxable payroll to 0.84 percent and reduce the present value of future Part A benefits by $136 billion. That is a measurable improvement, but not evidence of a transformative fiscal effect: MACRA stabilized physician payment and produced modest long-range actuarial benefits, but the law’s larger policy case depended on the performance of the QPP.

QPP Built a Value-based Framework, But a Weak One

The QPP created a new value-based structure for Medicare physician payment. It changed the language and mechanics of the physician payment system, consolidated quality programs, and established pathways for clinicians to receive payment adjustments based on performance or participation in alternative models. But simply creating a value-based framework does not mean it is strong. The central question 10 years later is whether QPP has produced meaningful incentives for better quality, greater efficiency, or lower spending. The evidence is uneven.

MIPS illustrates the problem most clearly. Its basic payment adjustments are designed to be budget neutral, meaning that penalties on lower-performing clinicians fund bonuses for higher-performing clinicians. That structure can redistribute Medicare payments among clinicians, but it does not directly reduce Medicare spending unless the incentives are strong enough to change clinical behavior.

The available evidence suggests they have not been. The Government Accountability Office found that from performance years 2017–2019, at least 93 percent of providers under MIPS earned a positive payment adjustment, while fewer than 5 percent qualified for a negative adjustment. In those early years, the highest positive adjustment was only 1.88 percent, and the median positive adjustment ranged from 1.27–1.66 percent.

Those results create an obvious tension. A program in which nearly everyone performs well may be politically easier to administer, but it is not well suited to distinguishing high-value care from low-value care. Similarly, small payment adjustments may be meaningful at the margin for some practices, but they are unlikely to transform the economics of physician behavior across Medicare.

More recent CMS data show the same basic pattern. For the 2023 performance year and 2025 payment year, CMS reported a mean MIPS final score of 82.91, a median final score of 85.49, a mean payment adjustment of 0.56 percent, a median adjustment of 0.90 percent, and a maximum positive adjustment of 2.15 percent. These are not the kinds of payment changes likely to overcome the underlying volume incentives in FFS medicine.

MIPS may still serve an administrative or reporting function. It may push practices to track quality measures, engage with performance data, or adopt health information technology. But as a value-based purchasing program, its design and results are underwhelming. Medicare Payment Advisory Committee (MedPAC) reached a similar conclusion in its March 2018 report to Congress, recommending that MIPS be eliminated and replaced with a different value component for clinician services in traditional Medicare. The criticism was not simply that MIPS is burdensome, although that concern is real. It was that MIPS does not appear capable of helping beneficiaries identify better clinicians, helping clinicians meaningfully improve practice patterns, or helping Medicare reward value in a fiscally meaningful way.

Advanced APMs Increased Participation, But Have Not Proven Net Value

Advanced APMs were a more credible attempt to move Medicare physician payment toward value. Unlike MIPS, which generally modifies FFS payments at the margin, Advanced APMs can place clinicians and organizations into arrangements with greater accountability for total cost and quality. In theory, this is where MACRA’s most meaningful value-based payment potential was likely to reside.

MACRA encouraged participation by offering qualifying clinicians a bonus equal to 5 percent of Medicare physician fee schedule payments from 2019–2024. Smaller bonuses followed in 2025 and 2026. After the 2024 performance year and 2026 payment year, the APM incentive payment ends, while qualifying APM participants receive a higher qualifying APM conversion factor than non-qualifying clinicians.

On participation, the incentives appear to have worked. MedPAC reported that the number of clinicians qualifying for the Advanced APM participation bonus increased from just under 100,000 in 2019 to more than 384,000 in 2024, out of about 1.3 million clinicians billing under the Medicare physician fee schedule. That growth suggests MACRA did help move more clinicians into the Advanced APM track.

But participation is not the same as value. A clinician can qualify for an Advanced APM bonus without the overall program necessarily saving Medicare money or improving quality in a measurable way. The key fiscal question is whether Medicare saves money after accounting for participation bonuses, shared-savings payments, administrative costs, and other model-related expenses.

MedPAC’s 2024 analysis highlighted that challenge. Advanced APMs often generate gross savings and may maintain or improve quality, but they usually fail to generate net savings once new payments in the program are included. MedPAC also noted that estimates of net APM spending often omit Medicare Advantage spillover effects and spending on the Advanced APM participation bonus, which totaled $3.3 billion to date.

That finding does not mean Advanced APMs are worthless. They are more serious than MIPS as a payment reform tool, and some models may improve care or reduce spending for particular populations. But MACRA’s Advanced APM track has not clearly proven that broader participation in accountable payment arrangements reliably produces net Medicare savings or measurable value improvement.

This is the core distinction in assessing QPP. MIPS appears too weak to create meaningful value-based incentives. Advanced APMs create stronger incentives, but those incentives come with costs that can absorb or eliminate the savings they are meant to produce. The two tracks have different weaknesses, but neither has fully vindicated MACRA’s broader value-based payment promise.

What the Spending and Quality Evidence Shows

A decade after MACRA, the strongest evidence is easier to find on spending and payment mechanics than on quality improvement. That matters because quality was central to the law’s stated purpose. QPP was intended to move Medicare away from volume and toward value, but the projected quality effects were often described more as expectations than as quantified improvements.

The early QPP estimates reflected that reality. MIPS was expected to redistribute payments through positive and negative adjustments, while also providing exceptional-performance bonuses of up to $500 million per year from 2019–2024. Advanced APMs were expected to generate hundreds of millions of dollars in incentive payments as clinicians moved into qualifying models. These estimates described a payment architecture built around bonuses, penalties, and reporting requirements. They did not provide a clear quantified forecast that QPP would produce measurable quality gains or net Medicare savings.

Outside projections were more optimistic, but also uncertain. RAND researchers estimated in 2017 that MACRA could decrease Medicare spending on physician services by $35 billion to $106 billion, or 2.3–7.1 percent, over 2015–2030. Yet those estimates depended heavily on how clinicians responded to alternative payment incentives and how payment models affected utilization beyond physician services. The range of possible outcomes was wide, underscoring how much of MACRA’s value-based promise depended on behavioral assumptions that were difficult to verify at the time.

Did MACRA Live Up to Its Intent?

MACRA’s record should be judged as a partial success. The law clearly accomplished one of its primary goals: It repealed the SGR and ended the recurring cycle of scheduled physician payment cuts and temporary congressional patches. That alone gave the law a durable policy rationale.

But MACRA’s broader goal was to create a physician-payment system that rewarded value rather than volume. On that front, the evidence is much less convincing. The QPP changed the structure of Medicare physician payment, but it has not clearly changed the underlying economics of care delivery. MIPS has functioned more like a low-powered reporting and redistribution system than a strong value-based purchasing program. Advanced APMs have increased participation in more accountable payment arrangements, but the net fiscal and quality evidence remains mixed.

The law was successful as a correction to a broken payment formula. It was less successful as proof that value-based payment incentives layered onto FFS Medicare can produce measurable improvements in quality, efficiency, or spending. MACRA may have moved Medicare physician payment in the direction policymakers wanted, but movement in the right direction is not the same as achieving the intended result.

The answer to whether MACRA lived up to its intent is therefore mixed. It lived up to its immediate intent by stabilizing physician payment. It created the structure Congress wanted for value-based payment. But it has not yet shown that this structure can reliably deliver the outcomes that justified the reform: better value, clearer quality improvement, and lower net Medicare spending.